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Utility Stocks' Q1 Earnings Due on May 2: WEC, OGS & More

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Only 11.1% of the utilities in the Zacks Utilities sector have released first-quarter results, registering 3.1% growth in earnings.
 
Utilities have been benefiting from the recovery in demand from the commercial and industrial group of customers post-pandemic. Improvement in economic conditions after the pandemic has been generating fresh demand for utility services.

Domestic-focused companies operating in the sector have been benefiting from new electric rates, customer additions, cost management, implementation of energy-efficiency programs, ongoing investments to improve the resilience of the electric infrastructure against extreme weather conditions and their transition toward cost-effective alternate sources of fuel to produce electricity.

Utility companies have been focusing to produce more electricity from clean sources and gradually shutting down coal-based production units. Courtesy of government incentives and a decline in expenses of utility-scale renewable power projects, quite a few companies have announced plans to achieve zero emissions by 2050.

Yet, the performance of capital-intensive utilities is likely to have been adversely impacted by an increase in interest rates from near-zero levels. An increase in borrowing costs and the resultant rise in interest expenses are likely to have adversely impacted earnings of the companies operating in the space.

In the reported quarter, the utilities are expected to have benefited from higher demand. Cold winter months and above-average temperature in the month of March are expected to have boosted demand for electricity.

Per the current Earnings Trends report, the utility sector’s first-quarter earnings are expected to increase 4.3%, while revenues are estimated to decline 10%. Utilities is among the 10 Zacks sectors that are expected to earn more in the first quarter than the year-ago period.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

WEC Energy Group’s (WEC - Free Report) first-quarter earnings are likely to have benefited from the improving economic conditions in service territories, which, in turn, boosted the demand for its services. WEC Energy’s proper cost management and operational efficiency are likely to have lowered expenses and boosted margins.

Our proven model predicts an earnings beat for WEC Energy this time around. It has an Earnings ESP of +1.69% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

WEC Energy Group, Inc. Price and EPS Surprise

WEC Energy Group, Inc. Price and EPS Surprise

WEC Energy Group, Inc. price-eps-surprise | WEC Energy Group, Inc. Quote

ONE Gas, Inc.’s (OGS - Free Report) first-quarter earnings are likely to have gained from strong demand from residential customers and the expansion of its overall customer base.

Our proven model does not conclusively predict an earnings beat for ONE Gas this time around. It has an Earnings ESP of +1.22% and a Zacks Rank of 4 (Sell).

ONE Gas, Inc. Price and EPS Surprise

ONE Gas, Inc. Price and EPS Surprise

ONE Gas, Inc. price-eps-surprise | ONE Gas, Inc. Quote

Otter Tail Corporation’s (OTTR - Free Report) first-quarter earnings are likely to have benefited from strong demand for electric services and solid contribution from the plastics segment.

Our proven model does not conclusively predict an earnings beat for Otter Tail this time around. It has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Otter Tail Corporation Price and EPS Surprise

Otter Tail Corporation Price and EPS Surprise

Otter Tail Corporation price-eps-surprise | Otter Tail Corporation Quote

American States Water’s (AWR - Free Report) first-quarter earnings are likely to have benefited from stable demand from the strong utility customer base and steady returns from long-term contracts with military bases.

Our proven model does not conclusively predict an earnings beat for American States Water this time around. It has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.